Household Energy Affordability

Household energy affordability remains a significant and unaddressed problem in New Zealand, and many households experience energy service deprivation, finding it difficult to pay expensive electricity bills and keep their homes warm and healthy. In Britain a household is described as in fuel poverty when it would need to spend more than 10% of its income on household energy in order to be adequately warm; many New Zealand households would meet this definition. He Kainga Oranga is working to better understand the effects of high electricity prices and energy service deprivation on New Zealand houesholds.

Background information

Fuel poverty has been defined overseas as the inability to acquire adequate household energy services for 10% of household income. This includes everything energy is used for within the home setting, including heating to WHO recommended safe indoor temperatures for health. The World Health Organisation has recommended maintaining indoor air temperatures of 18-24oC to protect health for the past 30 years, based on evidence that indoor temperature levels outside this range have negative physiological effects.

Fuel poverty is distinct from income poverty as it requires policy coordination of capital investment to improve building, heating and other appliance efficiency, while income poverty may be addressed through income support.1 Assessing fuel poverty as defined above in a population setting is difficult as it requires information on the contributing factors: income, housing efficiency, energy costs, and indoor temperature.
The adverse health effects of fuel poverty include physiological and psychosocial effects of exposure to cold indoor temperatures. Those most at risk of fuel poverty include families with young children, older people, people with disabilities or ill-health, and the unemployed. These groups spend most of their day at home, so require indoor temperature control for longer than people at work or school.

New Zealand has a high rate of excess winter mortality compared with other OECD countries and fuel poverty is a likely contributor to this. A study linking Census and mortality data showed a statistically increased risk of dying in winter among low-income people, those living in rented accommodation and those living in cities. Households, particularly in the private rental sector, commonly rely on electric space heating which is costly and often ineffective. This combined with a housing stock of poor thermal efficiency contributes to the cold indoor temperatures experienced by many households.